Reston real estate and Reston living

New FHA Loan limits will help area buyers!

March 24, 2008

Good News from top lender Scott Barr of Bank of America…we have found him to be knowledgeable and responsive…if you would like his contact info. drop us a line.

By now you have received all the great
news about how the maximum FHA loan has increased to $729,750. This
is great news for your jumbo borrowers! It means that they will have
to make smaller downpayments (only need 3% of the sale price in the transaction).
It means that the conventional soft market policies go away. It
means that the current issue over credit scores goes away as FHA does not
require credit scoring. All of this is great for your borrowers and
will, I hope turn into increased sales for you.

What it means to you is a bit more complex.
For many realtors, going to the world of government lending is like
taking a trip to France. The language is different, the culture is
different and it will take some getting used to. And just like going
to France, some agents will have misconceptions about what it is really
like. An example is that the FHA no longer requires many of the appraisal
conditions that many older agents will remember; though they are still
very concerned about property conditions that affect health, safety and
well fare of the purchaser. Another example would be that FHA can
be structured to do 100% financing (when you use Downpayment Assistance
Programs) and if you would like help on how to structure this let me know.
FHA is very easy on non-permanent residents but it’s only for owner
occupants. FHA is easy on credit scores (not required) but they want
clean credit in the last 12 months. FHA is much easier on gifts and
who they come from but harder on the documentation for them. FHA
is easier on debt to income but requires more documentation typically.
I can go on and on. . .

At the end of the day, you’ll be able to sell more homes because you’ll be able to have better pricing. As of today for example, the difference between a FHA loan and a conventional 30 year fixed jumbo was 1.375% in interest. On a 90% $650,000 that’s about $592.00 per month in payment difference! Some of you are going
to say, well that’s just great Scott but Fannie Mae and Freddie Mac’s limits
are also going up to $729,750 very shortly and we won’t need to worry about
all this. Yes, it’s true the GSEs (government sponsored entities)
are going up but there is already rumor that there will be tiers in pricing
and greater downpayment requirements as you go up in loan amount beyond
$417,000. This isn’t going to happen with FHA. Only time will tell.